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Pre-construction Condos’ Payment Schedule

Posted by Toronto Condo Home on December 31, 2022

Financial matters can be complex, especially if the facts are unclear. Read on as we provide some of the most crucial information on the financials of buying a condo in the pre-construction period to guide you through your purchase process if you have your heart set on purchasing a pre-sale condo in Toronto.

In this article, you’ll find some facts about pre-construction condos’ payment schedule that you should know, so scroll down and keep reading to get all you need!

The Financial Facts about Buying a Pre-Construction Condo

To get familiar with condos’ payment schedule, first, you should know some facts about buying a pre-construction condo. A pre-construction condo purchase requires a significant monetary commitment. First, since it has yet to be constructed, you’re buying based on an imagined vision of what the finished structure and suite will look like. In contrast to purchasing a freehold property like a house, you also have to pay for upkeep, maintenance, and communal utilities. Because of this, it’s crucial to think carefully about buying a pre-construction condo before deciding.

Contrary to popular belief, pre-construction condos are more affordable.

It needs to be corrected to say that the typical person or couple cannot afford to buy a condo in downtown Toronto or the GTA. In many circumstances, buying a condo is more appealing and inexpensive than buying a freehold house, particularly in Toronto’s downtown.

“The single-family home market has become unaffordable, and that’s the reality for markets such as Vancouver and Toronto.” Stéfane Marion, the chief economist of the National Bank, said.

According to the Globe and Mail, this has caused many first-time buyers to enter the condo market, which has grown more affordable for such buyers due to an abundance of supply.

During the condos’ payment schedule, you give back to the community when you purchase a condominium.

Condo developers must pay certain development levies to municipalities to support local infrastructure funding. Developers frequently pay money to fund the construction of public community centers and parks close to the project site in exchange for permitted increases in height or density, which is fantastic for your lifestyle and supports the neighborhood.

Tips for buying a condo

TIP: It’s critical to learn how a developer handles these costs if you’re purchasing from them. Do they come with the purchase price, or will they be charged later?

No closing expenses will be concealed from you by reputable builders.

In fact, they will make an effort to include any additional costs in the suite’s price so that your mortgage payments will cover them. It never hurts to do your research, though, and have a lawyer look at the Tarion Addendum, the Disclosure Statement, and the Agreement of Purchase and Sale (if there is one).

Be wary of prices that seem absurdly low.

It only sometimes implies you’re overpaying if a suite from one developer seems more expensive than others. The fact that the purchase price covers all expenses may indicate that the building’s construction and finishing are of a higher caliber than those of the competition.

TIP: Watch out for developers who offer you low prices in an attempt to entice you because you might need to get the quality you expect.

Now let’s get closer to knowing about the condos’ payment schedule by knowing about pre-construction deposit payments.

pre-construction Deposit Payments

The issues concerning deposits are those that are asked about presale condos the most. In the condos’ payment schedule, depositing on a presale property is the first step toward buying one.

Pre-construction apartments typically require down payments of 20% or more, as opposed to the typical 5% down payment for resale apartments. This can appear costly to many purchasers at first glance. Because of this, builders provide what is known as a “deposit structure,” which is essentially a down payment installment plan.

20% on average, but deposit structures are flexible.

The deposit structure is one-factor influencing investors’ decisions to buy preconstruction condos. They can put down 20% of the condo’s value, but for the following three to five years, they will receive appreciation on 100% of the home’s value. They no longer worry about taxes, maintenance, mortgage payments, insurance, or tenants.

Every project’s and condo’s payment schedule is unique, but usually, the deposits are spaced out over a year.

Deposits are frequently separated over time.

For a pre-construction condo suite, the deposit for a Canadian buyer from a builder is normally 20% of the purchase price (for overseas buyers, the deposit is often 35%). 20% is a sizable sum of money when purchasing a $500,000 suite, especially when done all at once. Fortunately, reliable and high-quality builders don’t demand a one-time payment. In contrast, payments are typically made over time, sometimes for as long as 15 months.

Additionally, your deposit is secure.

Your purchase costs will include a Tarion Warranty Corporation membership fee when purchasing a pre-construction condo from a reputable developer. This fee offers deposit protection of up to $20,000 as part of the purchase price. In this approach, the financial loss will be less severe in the improbable scenario that the condo building is not completed.

pre-construction Deposit Payments

TIP: in the condos’ payment schedule, it’s always a good idea to ask the sales center samples what further regulations and permissions the builder has to prevent fraud and ensure your deposit is entirely secure. Actually, your deposition is fully protected by the Condo Act and presumably a Tarion Warranty.


Every project is unique, but normally the deposits are spaced out across a year.

A typical deposit structure will be as follows: 5% when signing, which is refunded as soon as the offer’s conditional time has passed.

  • 5% within 30 days
  • 5% within 60 or 90 days, 5% within 120, 240, and 365 days, or 5% upon occupancy

The above timetable is the most common. However, some builders offer incentives of 5% annually or $1000 per month for five years.

If you still need to learn more about condos’ payment schedule, keep reading; we have answered every question!

Condo Assignments Terms in Toronto

Condo Assignmnets

Details of a Contract for a Presale Condo

In a condo’s payment schedule, one important part is the contract. A presale transaction entails signing a contract to purchase a strata unit that still needs to be constructed. The condominium project where the subject unit is located is still just a hole in the ground or a partially finished structure. When the pre-sale purchase contract is signed, there might not even be a building permit or financing set up, let alone a strata plan that has been filed.

A presale transaction entails signing a contract to purchase a strata unit that still needs to be constructed. The condominium complex where the subject unit is located is still just a hole in the ground or a half-finished structure. On a condos’ payment schedule, when the pre-sale purchase contract is signed, there might not even be a building permit or financing set up, let alone a strata plan that has been filed.

Every pre-sale agreement in Toronto includes a rescission clause, which allows the buyer to cancel the transaction within that time frame for any reason (or no reason at all).

The goal of the rescission term is to give the buyer time to reconsider whether or not to purchase the subject unit and to carefully read the lengthy purchase agreement and disclosure statement that go along with a pre-sale purchase. In the condos’ payment schedule, only some people read these documents before making a purchase offer! Many buyers only check them to ensure the price and number of parking spaces are correct.

Mortgage to Purchase pre-construction

Presale Payment Schedule

You’ve come to the right place if you want to learn more about the pre-construction condos’ payment schedule process and need to familiarize yourself with it.

Before making a presale purchase, understanding the contract terms and payment plan for pre-construction condos is crucial; every project, and consequently, every condos’ payment schedule, is unique, so it is crucial to ensure you are safe, protected, and thoroughly knowledgeable about the contract you are signing.

They receive payments over time for presale properties. Typically, a predetermined sum is needed when the contract is first signed.

The developer’s attorney or, occasionally, the brokerage of their real estate salesperson then holds that agreed-upon sum in trust.

Then, after making a presale deposit, you have a 7-day right of revocation.

You are entitled to your original deposit’s return if you decide within this 7-day window that you won’t be moving forward with the project.

As an alternative, the developer will have a set deposit schedule in the initial contract if you go ahead with your purchase and pass the 7-day rescission period.

Now you know everything you should know about condos’ payment schedule. Let’s know about the mortgage to purchase pre-construction.

Mortgage to Purchase pre-construction

Are mortgages required for pre-construction purchases?

Given that the item you purchase doesn’t exist and most likely won’t for several years, you don’t need a mortgage. However, you will need a mortgage pre-approval that satisfies the demands of a developer.

It is challenging to forecast your budget when a project will be finished in three or four years. Developers could want a letter of intent, in which the mortgage broker certifies that you are qualified and will feel at ease getting a mortgage by the time the project is finished after reviewing your finances. It’s a part of the condos’ payment schedule.

Some builders will request a lender’s preliminary approval (in some cases from a particular list of lenders, typically A lenders like the big Canadian banks). In this situation, you would have to meet the requirements for your unit as though you were occupying it right away rather than three or four years from now when the project is finished.

The final closure of your apartment marks the beginning of your mortgage loan. Your occupancy date might or might not coincide with this.

To be clear, your final closure occurs when the developer has completed the building as a whole, the building has been registered, and the ownership of your unit has been transferred to your name.

Your entire unit payment is due at that point. Consequently, you must obtain a mortgage as part of a condo’s payment schedule (unless you pay everything outright with cash).

Therefore, it would be best if you had a mortgage in place at this time.

Final words

Pre-construction condos’ payment schedule is far more complicated than condo resale purchases. Remember that the person at the sales center works for the builder and that it is their responsibility, not yours, to negotiate the best possible terms and prices for the builder. Visit TorontoCondoHome to find your ideal pre-construction condo if you’re thinking about buying one and consider that you are able to choose your condo’s floor plan, when you decide to buy a pre-construction condo.

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